3.24.15 - Capital Controls in America?
Gold last traded at $1,191 an ounce. Silver at $16.98 an ounce.
STOCKS: The major U.S. indices finished lower Tuesday in choppy trading, despite upbeat economic news. The U.S. consumer price index (CPI) rose 0.2% in February for the first time in four months. Meanwhile, New home sales hit 7-year high in February, however we are still at less than half the average new homes sold a decade ago - before the housing boom.
DOLLAR: The U.S. dollar recovered slightly against the euro following two straight sessions of losses on word the Fed may still hike interest rates this year. We shall see. Did you know the word "dollar" is defined as a weight measurement of physical gold or silver according to the U.S. Constitution and Coinage Act of 1792? It's true. But today the U.S. dollar is a weight measurement of nothing, except debt and public confidence. As former Fed economist John Exter has said, "Today's U.S. dollar is a I.O.U. Nothing".
GOLD: Precious metal prices continued their upward climb despite a stronger dollar. $1,200 an ounce gold could be surpassed this week. This is no time to delay precious metal purchases. Dollar-denominated assets are at risk and gold serves as the perfect wealth insurance. As we have discussed, gold is more than a commodity or an investment, it is the world's ultimate form of currency - accepted worldwide.
BANKS: The U.S. Justice Department calls for capital controls in America, reports WSJ. "The U.S. Justice Department's criminal head said banks may need to go beyond filing suspicious activity reports when they encounter a risky customer. We encourage those institutions to consider whether to take more action: specifically, to alert law enforcement authorities about the problem. A tip-off from a bank about a suspicious customer could lead law enforcement to seize funds or start an investigation."
This is Major Risk #20, covered in the book DON'T BANK ON IT!, which says ... "Banks increasingly are resisting and refusing depositor requests for large withdrawals, much as would happen under government 'capital controls.' To most Americans, it seems incredible that your bank would refuse to let you withdraw your own money. We challenged them, as we challenge you right now ... test this. Go to your bank where the tellers are always friendly and say you want to withdraw $5,000, $10,000 or $15,000 from your account in cash. What others we challenged have told us, in astonishment, is that their bank refused while asking why they wanted the money. In many banks the tellers and assistant managers appear to have been trained in techniques of putting such customers on the defensive by insisting that they justify such a withdrawal."
Meanwhile, Fox News reports, Congress is launching hearings on complaints from businesses targeted by 'Operation Choke Point' ... "Banks and other financial institutions were reportedly pressured to cut off accounts for targeted businesses. This included gun stores, casinos, tobacco distributors, short-term lenders and other businesses. the FDIC put out a list of 30 high-risk businesses, but that list has since been rescinded. The U.S. Consumer Coalition claimed taking down that list only removed a guideline, and without a specific list of businesses, the subjectivity of who gets targeted was increased." ['Operation Choke Point' is also covered on pages 156-157 in DON'T BANK ON IT!]
DEBT: "The world's next credit crunch could make 2008 look like a hiccup," according to the Telegraph. "A solar eclipse, a super moon, the FTSE 100 breaching 7,000 and the US Federal Reserve speaking in tongues - truly some kind of financial apocalypse must be nigh. Let’s say that US interest rates do rise sooner and faster than the market expects. That means bond prices, which always move in the opposite direction to yields, will plummet. US Treasury bonds are like a mountain guide to which most other global securities are roped - if they fall, they take everything else with them. Who will get hurt? Everyone. But it’ll likely be the world’s banks, where even little mistakes can create big problems, that suffer the most pain."
3.23.15 - Dollar falls on Fedspeak
Gold last traded at $1,187 an ounce. Silver at $16.89 an ounce.
DOLLAR: The U.S. dollar index fell for a second session Monday, against a basket of major currencies, after traders unwound bullish dollar positions on the likelihood that Federal Reserve policy will be accommodative over the near term. It appears the Fed's latest ambiguous statement is having its intended bearish effect on excessive U.S. dollar bullishness. A weaker dollar has a beneficial effect on U.S. stock speculation and helps to reduce the pressure for the Fed to lift interest rates sooner rather than later.
FED: The Fed is no longer 'patient', but they’re also 'not impatient', we learned from Fed chair Janet Yellen last week. Instead, they are now data dependent. But is the data trustworthy? Or are they interpreting it correctly? WSJ says "It's High Time to Audit the Federal Reserve". "History shows that these so-called experts are prone to destructive inflationary and deflationary blunders, and that the Fed’s actions over the last century represent the greatest systemic risk of any financial organization in the world. Since the Great Recession ended, the Fed has been running an unprecedented, giant monetary experiment. This experiment includes years of negative real interest rates, the creation of a huge asset-price inflation, and the monetization of real-estate mortgages and long-term bonds. Should the Fed, or anybody, be allowed to carry out such vast and very risky experiments without effective supervision? The correct answer is: no." For more about the Fed read our latest White Paper The Biggest Bank Heist In History!
DEBT: A global liquidity crisis may spark the next financial crash, reports London Telegraph. "Traders warn of a global credit 'meltdown' if corporate bond markets don't improve. Investors across corporate bond markets are finding it harder to buy and sell company debt. And some investors are beginning to fear that the lack of liquidity will be the spark that ignites the next crisis in financial markets. A rate hike by the US Federal Reserve, which would be the first since 2006, could trigger turmoil.".
BANKS: As interest rates fall, borrowing becomes more attractive than saving. Central banks hope that banks will lend more money at low rates to consumers, who (they hope) would spend money, as opposed to saving it, due to rising economic uncertainty. But, as the Aden Sisters report, "It's not happening yet. The biggest problem is debt and we believe it's passed the tipping point. Debt has increased 40% in seven years to $200 Tril. Gold, as the ultimate currency, is only second to the U.S. dollar in terms of major currency strength. The dollar rise will soon be stemmed, either by intervention or exhaustion. A dollar decline will give gold a boost."
GOLD: Precious metal prices hit a two-week high Monday, with gold prices closing in on $1,200 an ounce. The weaker dollar forecast is bullish for gold, as both gold and the buck are in competition for the top global currency spot - with gold having a 6,000 year history of always winning. Meanwhile, The LBMA Gold Price, the newly launched gold price fix mechanism, ran without a hitch on Friday, according to the London Bullion Market Association. LBMA's chief executive, Ruth Crowell, says, "I'm delighted that Friday's launch went smoothly and that now all four precious metals prices have been successfully transitioned to independently administered, electronic auctions. Like its predecessor, the new fix runs twice daily at 10:30am and 3:00pm London time."
2016: Senator Ted Cruz annouced the first major campaign of the 2016 presidential season Monday with a kickoff speech at Liberty University vowing to reignite "the promise of America." "Imagine a president that finally, finally, finally secures the borders," said Cruz. "Imagine a simple flat tax," ... "Imagine abolishing the IRS," reports Reuters. He spoke on the fifth anniversary of President Barack Obama's health care law - legislation that prompted Cruz to stand for more than 21 hours in the Senate to denounce it in a marathon speech that delighted his tea party constituency and other foes of the law.
3.20.15 - Metals Spring Forward
Gold last traded at $1,184 an ounce. Silver at $16.88 an ounce.
DOLLAR: The U.S. dollar sell-off accelerated Friday on the expectation that Federal Reserve policy makers would leave interest rates lower for longer, just as authors Craig Smith and Lowell Ponte predicted in their latest White Paper The Biggest Bank Heist In History!
GOLD: Precious metal prices ended the week 2.3% higher on the back of a weaker U.S. dollar and lower U.S. treasury yields. Gold prices could easily rise beyond $1,200 an ounce next week if this trend continues. With the price of wealth insurance rising, now is the time for action - both in your personal portfolio and in your retirement portfolio before April 15th.
FED: On Wednesday the Fed did virtually nothing, except to change a few words in their official policy statement. The Fed, and perhaps all central banks, are now trapped in a zero-interest, near-zero growth world. The Fed is afraid to take the spiked punchbowl away from the Wall Street party, despite ample evidence they are creating a culture of speculation by rigging the financial markets to benefit big banks with near-zero interest money. Shame on them!
ECONOMY: John Crudele at NYPost explains why interest rates can't rise yet: "Right now the data aren’t looking promising for those who want higher rates. A real-time tally of the nation’s gross domestic product for the first quarter of 2015 - conducted by the Federal Reserve Bank of Atlanta - shows that the US economy might be contracting (not growing) by the time the first quarter ends on March 31. Earlier this month, the GDPNow figures compiled by the Atlanta Fed showed that the US economy from January until early March had grown at only a 1.2 percent annualized rate."
BANKS: "SOB bankers should be punished," reports CNBC. How do you improve the culture of Wall Street and restore faith in finance? Personally punish the industry's bad apples, according to two longtime observers. "I think we need to personalize the penalties for those who are sinners. It's got to hurt them individually," Charles Ellis, a prominent investment consultant and author, said at an event this week in New York on improving the financial industry. Sadly, today it appears our mega bankers are too-big-to-jail.
JUST CAPITAL: "Can capital be just?" asks hedge fund manager Paul Tudor Jones II in a 2015 TED presentation. As a firm believer in capitalism and the free market, Jones believes it can be."This gap between the 1 percent and the rest of America, and between the US and the rest of the world, cannot and will not persist," says the investor. "Historically, these kinds of gaps get closed in one of three ways: by revolution, higher taxes or wars.” Jones proposes a fourth way; just corporate behavior. He formed Just Capital, a non-profit that aims to increase justness in companies.
STOCKS: U.S. stocks saw a technical rally on this "quadruple witching" Friday as equity options, stock-index futures, stock index options, and single stock futures all expired today. But this rally is not to be trusted looking ahead. Marketwatch reports stocks more often than not produce below-average returns during widely followed "March Madness" sports tournaments which begin next week. "During last year’s March Madness the S&P 500 fell 1.5% between the opening round of the 2014 NCAA championship and the final game."
3.19.15 - Fed's "Rigged" Markets Headed for Hard Fall
Gold last traded at $1,169 an ounce. Silver at $16.11 an ounce.
STOCKS: Wednesday's Fed-induced stock market rally reversed direction on Thursday, taking the Dow down triple digits as investors further digested the Fed's latest statement. "The stock market is rigged, but that's not necessarily a bad thing," strategist Ed Yardeni said Thursday to CNBC. "This is not about investing, this is all about the central bankers," he added. What more do you need to know? Now is the time to reduce stock holdings and increase diversification into tangible assets. Meanwhile, the Philadelphia Fed's business index slipped to new low, further undermining the so-called economic recovery.
FED UP: "Can we ever find our way back to free markets?" ask Craig Smith and Lowell Ponte. "The economy-shaking Fed announcement: the easy cash will keep coming until at least June - and perhaps until 2017. Nobody was surprised. Zero interest rates may be good news for the big guys and government, but it's very bad news for you and me. Whatever this economic system is that we now live under, it is no longer free market capitalism." Craig Smith was a guest on The Howie Carr Show today discussing the Fed's latest "sad" policy statement, and offered listeners a free copy of The Biggest Bank Heist In History! He told Carr's listeners the Fed is creating market bubbles in stocks and the dollar, while (un)stimulating the slowest recovery in U.S. history. The Fed has set us on course for a hard economic landing in the near future.
CAPITALISM: Fox Business: "Misguided Attacks Upon Capitalism" - With U.S. corporations reporting record profits, one would think the world would be embracing our free market system, but protests are turning violent both in Germany and the U.S., reports Neil Cavuto on Fox Business Network. Author and Swiss America Chairman Craig Smith feels groups such as Blocupy in Europe and BlackLivesMatter in the U.S. are misguided in protesting capitalism, which is the engine of jobs and improving lives. Regarding Blockupy's violent protest of the new $1.4B headquarters of the UCB, Craig agrees with Neil that we should not be depending upon Central Banks to improve the economy. Banks don't create wealth, they distribute and store wealth in accordance with a free market. Capitalism works, says Smith. We need to go back to the basics, as Ben Franklin insisted be engraved on our first U.S. coinage, "America: Liberty, Industry and Parent of Science" - which provided the foundation to create the greatest country in the history of the world.
BANKS: "Swedish central bank cuts key rate further below zero," reports Telegraph. "The world's oldest central bank has slashed its main interest rate to -0.25% and will increase its quantitative easing program as it seeks to revive prices and drive down the value of its currency." Meanwhile, at least one bank is finally on trial for the financial crisis, reports New Republic. "The trial of the century - a long-awaited determination of the damage perpetrated by Wall Street institutions in the financial crisis - began Monday in New York. But it's only happening because one bank - unlike Goldman Sachs, JP Morgan, Citigroup, and Bank of America - refused to settle out of court. The Japanese firm Nomura stands accused of lying to mortgage giants Fannie Mae and Freddie Mac about the quality of mortgages pooled into securities during the housing bubble. The case will finally reveal hard data on just how much money Nomura, and the rest of the industry, made through fraud."
GOLD: Precious metal prices extended gains Thursday despite a sharply higher dollar. Once again we see the strength of gold as the world's preferred currency. Barrons gives a convincing argument Why Gold Will See $2,000. "Over the next decade, emerging market central banks will need to hold a larger stock of physical gold in their vaults to shore up confidence in the newly floating exchange rates. A recent IMF paper showed that gold was viewed by central banks as an asset that could be used to reduce risk. These results are consistent with a survey ANZ conducted with central banks and sovereign wealth fund managers in early 2014 which found that almost half of the respondents believed that gold was a safe haven asset over the long-term. Additionally, over 60% of respondents believed that gold would constitute a larger proportion of central bank reserves over the next two years. Gold prices are likely to rise gradually, eventually breaking through the $2,000/oz level within the next decade."
Get gold now, thank yourself (and us) later!
3.18.15 - Fed Extends Free Lunch, Gold Prices Jump
Gold last traded at $1,166 an ounce. Silver at $15.89 an ounce.
FEDSPEAK: The Fed dropped the word "patient" but signaled more patience in raising interest rates. “Just because we removed the word patient from the statement doesn’t mean we are going to be impatient," Fed Chair Janet Yellen said in a press conference Wednesday. That is what we call classic "Fedspeak". Swiss America Chairman Craig Smith writes, "Janet Yellen is going to continue zero interest rate policies (ZIRP) because the Fed believes the economy is not strong enough to survive an interest rate hike. How sad! It is really something to see the stock markets clearly being supported by Federal Reserve actions for a sixth consecutive year. In the meantime, savers will continue to lose buying power and the value of their deposits." Marc Faber tells CNBC, "The Fed won't raise rates this year. Any move in the federal funds rate would be meaningless until it hits 3 percent." We agree.
STOCKS: The Dow jumped over 1% on the Fed statement, interpreting it as an extension of the virtually free lunches for big banks, speculators and borrowers. But Real Clear Markets reports, "Fed policy has fostered the delusion that cheap money is a free lunch. Such thinking results from years of interventionist monetary policy. After six years, quantitative easing and zero rate policies have impaired the recovery and exacerbated wealth disparities. A wealth effect has a disparate impact on households and businesses depending upon whether they belong to the wealth economy or the income economy. The price of our 'free lunch' is going up." But for now, the Wall Street party continues.
BANKS: "Banks struggle to keep up as cybersecurity risks increase," reports IPWatchdog.com. "As cyber attacks grow in complexity, hackers are likely to stop targeting retailers and other stores and start to target the banks themselves. If they're successful, this could have catastrophic consequences on our economy and global financial systems." Meanwhile Reuters reports, "Anti-capitalist protesters clashed with riot police near the new headquarters of the European Central Bank (ECB) in Frankfurt on Wednesday and set fire to barricades and cars, casting a pall over the ceremonial opening of the billion-euro skyscraper. The protest was organized by a group called Blockupy." Author and Swiss America Chairman Craig Smith will be discussing this topic on Fox Business tonight.
GOLD: Precious metal prices flew upward on a weaker U.S. dollar after the Fed statement. However gold is a safe haven in an uncertain world no matter what the Fed says or does. The gold market could see another major perception shift Friday as the Chinese begin participating in the the twice-daily gold price fix. Marketwatch.com reports, "The London Bullion Market Association said the LBMA Gold Price will launch the ICE Benchmark Administration operating the auction process on Friday. The London Gold Fix has been the target of decades of manipulation allegations." Bottom line, gold prices are back on the move and additional market transparency will help encourage new investors to add gold to their portfolio. So, what are you waiting for? We just might look back at $1,175 gold as the best buy of the year!
LAUGH OF THE DAY: "I don’t think the system is broken, I think it's working well. I believe the Fed is already one of the most transparent central banks of any around the globe."
-Janet Yellen, Commenting On "Audit The Fed" Bill
3.17.15 - The Fed's Big "IF"
Gold last traded at $1,148 an ounce. Silver at $15.58 an ounce.
FEDSPEAK: Tomorrow's Fed statement is unlikely to bring much clarity to markets. Marketwatch.com reports, "Hell will break loose if the Fed loses its patience." We shall see. Craig Smith thinks the markets may be fretting too much, too soon over Fed interest rate hikes. As he covers in his latest White Paper, The Biggest Bank Heist In History! the Fed is now trapped by their own words. Remember Janet Yellen has been saying the Fed will raise interest rates "IF" we see strong employment AND wage growth AND 2% inflation. That's a Big IF, since none of those goals have been met yet. The truth is, we could be stuck in a zero interest world for yet another year - further punishing Middle Class workers and savers while rewarding big banks and borrowers.
STOCKS: U.S. stocks moved sharply lower on Tuesday, with the Dow suffering triple-digit losses despite a weaker dollar. Investors are nervous as the Fed's two-day meeting has many expecting the central bank to prepare the way for an interest-rate hike this summer by removing the word "patient" from its statement. Meanwhile, the February housing report points to a slump in new home construction.
DEBT: "Let the debt ceiling games begin!" says Fortune.com. Will Republicans cave in to Obama and raise the debt ceiling? Or will Obama cave in to the GOP? Or might the President invoke the 14th amendment to unilaterally raise the debt ceiling? Or might the Federal government shut down again for 16 days, like we saw in 2013? Meanwhile the economy is on life support by tapping into government pension funds. Today House Republicans unveiled a budget proposal that would eliminate the federal deficit within 10 years, increase military spending and repeal the Affordable Care Act. The chances of approval? Near zero.
DOLLAR: "America's European 'Allies' Desert Obama, Join China-led Infrastructure Bank," says ZeroHedge.com, the sea of de-dollarization has reached the shores of Europe. The London Financial Times reports, "France, Germany and Italy have all agreed to follow Britain’s lead and join a China-led international development bank, according to European officials, delivering a blow to US efforts to keep leading western countries out of the new institution." Forbes.com says that leaves Obama with three options; 1) Continue to press its allies not to join the AIIB until governance procedures for the bank are assured, 2) Join the AIIB itself, or 3) Drop the issue. ZeroHedge.com concludes, "It won't be long before other western nations jump on the anti-dollar bandwagon with action and not just words."
ENDGAME: "We are now at the endgame of the biggest economic and financial bubble in history," says Egon von Greyerz, founder of Matterhorn Asset Management. "With both U.S. stocks and bonds near the highs and the dollar recently surging, it seems that the U.S. is still an invincible superpower. But sadly, the U.S. will just be the last country to fall and that fall is imminent. 23 countries have already lowered interest rates in a futile attempt to stimulate the economy. But pushing on a string has no effect anymore. The three super-bubbles in the U.S. - dollar, stock market and bonds - I expect two, if not three, to start a major and sustained fall this year. This fall will be the beginning of a long and very hard collapse of the world economy."
GOLD: Precious metal prices drifted lower on technical selling ahead of the Fed statement Wednesday. Short-term speculators may affect daily gold price swings, but not the long-term trend, which has been upward since 2001. Smart investors have learned to buy gold and then hope the price goes lower, so they can acquire more gold at a lower price and "cost-dollar average" all of their holding lower. If you would like to discuss this proven strategy, call your Swiss America broker today at 800.289.2646.
3.16.15 - Strong Delusions of Grandeur
Gold last traded at $1,153 an ounce. Silver at $15.62 an ounce.
FED: Get ready for linguistic gymnastics later this week from the Fed. Why? Because "For the Federal Reserve, patience may no longer be a virtue," reports Associated Press. "Surrounding the Fed's policy meeting this week is the widespread expectation that it will no longer use the word 'patient' to describe its stance on raising interest rates from record lows." Could Fedspeak put the brakes on the dollar rally? Stay tuned.
DOLLAR/GOLD: Speaking of the dollar rally, take a look at this 13-year chart comparing the U.S. dollar index with the spot price of gold. Back in 2002 the Dollar Index stood tall, above 120. Since then it has been underwater. Meanwhile gold prices, which began at $297 in March 2002, have risen to $1,152 today, a 257% price increase. Swiss America Chairman Craig R. Smith calls this a "strong dollar delusion" because keeping all of your money in dollars is like walking up a down escalator. Lots of action, but no progress. In recent years physical gold has been decoupling from commodity prices, such as oil, but has remained stable during the recent dollar "rally". Why? Because the world recognizes physical gold alone as the ultimate form of money which maintains buying power. Mr. Smith advises to ignore the daily price fluctuations of gold and to focus on long-term growth and wealth preservation.
STOCKS: The Dow rallied triple digits Monday as the U.S. dollar index sliped below 100 and oil prices slid to 6-year low. Could it be the U.S. economy is not following the "recovery" script because it is not a real recovery, as Craig Smith and Lowell Ponte have been writing about for the past six years? Meanwhile, Marketwatch reports, "Bull market is 'closer to the end' than investors think".
DEBT: The U.S. hit the debt limit again Sunday night. So beginning today, Treasury Secretary Jacob Lew will take "extraordinary measures" to keep the government from defaulting on its debt. Those include a halt to new investments in federal employee pension funds, a moratorium on deposits from state and local governments and drawing down a $23 billion currency stabilization fund.
BANKS: "Fed Should Stop the Stress Test Guessing Game", reports AmericanBanker.com. "There is a big problem with the Fed's current testing regime: the tests lack transparency. Banks can wind up failing them for fairly minor reasons - not because they face a liquidity shortfall. Since stress tests only happen once a year, banks can 'game' the stress tests by accumulating the right positions necessary to meet the requirements when the tests roll around and quickly revert back to smaller capital cushions. A higher frequency of tests throughout the year would easily prevent this moral hazard."
UN-RETIREMENT: "Obama needs to loosen grip on retirement plans," says CNBC. "The president just recently encouraged the Department of Labor to push for more rules and regulations on the financial brokers and advisers who provide employer-sponsored 401(k) plans. This is the complete opposite of the direction we should be taking. The time is right to 'decouple' retirement savings from our employers."
3.13.15 - A little perspective, please!
Gold last traded at $1,152 an ounce. Silver at $15.50 an ounce.
MARKET SUMMARY: U.S. stocks suffered sharp losses Friday as consumer sentiment fell, despite lower producer prices. Market volatility is on the rise, despite "healthy" banks being pumped up by six years and $9 trillion in Fed stimulus. Precious metal prices today traded steady to higher, despite the U.S. dollar index reaching 100 for the first time since March 2003.
ECONOMIC REALITY: Is the reality of the fragile state of the world economy beginning to sink in? What will happen when the next economic crisis strikes our fractured monetary and banking system? Likely panic because we've lost trust in virtually every one of our institutions; our leadership, the mass media and, sadly for many, even our religion or value system. But there is a 6,000 year old solution to preserving your hard-earned wealth, which represents your time, your labor and your future: GOLD.
As we discuss in our 2015 Real Money Perspectives, despite what financial "experts" may say, gold is more than a commodity or an investment - it is the world's one and only trustworthy store of value. If gold were a commodity its price would have fallen in half, like oil prices have. If gold were just an alternative investment, its price would not have remained stable during the 2014-15 stock market and dollar rally.
THE GOLD STANDARD: Amazingly, America had a stable gold foundation for growth and prosperity for over 170 years of our history; between 1792-1964. The prices of good and services gently deflated and labor and wealth held in gold coins gradually increased over time. However, since our leaders abandoned the Gold Standard - the foundation for our money and currency system - the prices of everything have been rising and the value of the U.S. dollar has been falling.
As this chart illustrates, over the last sixty years the value of our time, labor and savings has been in decline. Without gold, it takes more of our time (and life) to buy the necessities of life, such as an automobile or a home. But notice the price we pay for a car or home has historically declined if you had wisely put yourself onto a personal gold standard decades ago.
The good news is that it is never too late to start putting yourself on a personal gold standard. With precious metal prices hovering near 4-year lows, now is the time to buy some wealth insurance. If you already own physical gold that was purchased at a higher price, buy more at today's lower price to bring your average wealth insurance cost lower. This is what smart money does during temporary price dips. And if, by chance, it goes lower next month, buy more!
As the tide of political and economic uncertainty rises, so does the necessity of protecting your life savings with gold coinsyou can hold in your own two hands.
No one knows what the future will bring, but based upon the past we can say with confidence that gold is one of the most trustworthy assets to own over the long haul. Forget about the gold price, gold represents true value at any price. And please, don't wait to buy gold, buy gold and wait!
3.12.15 - Strong dollar creates new global stress test
Gold last traded at $1,151 an ounce. Silver at $15.51 an ounce.
DOLLAR: The U.S. dollar eased back on Thursday after rushing toward 12-year highs this week. However, the surging dollar now poses a major policy dilemma for Fed this month. "The world is more dollarized today than any time in history, and therefore at the mercy of the US Federal Reserve as rates rise," reports Telegraph. "Sitting on the desks of central bank governors and regulators across the world is a scholarly report by the Bank of International Settlements that spells out the vertiginous scale of global debt in US dollars, and gently hints at the horrors in store as the US Federal Reserve turns off the liquidity spigot."
BANKS: "Now healthy, banks gush cash," says USA Today, reflecting the passing of 29 of 31 major banks in the recent Fed stress test. But should Americans begin dancing in the streets to know that our major banks have a measly 5% minimum cushion to cover another major financial meltdown? You be the judge. Keep in mind Bank of America and five other big banks stumbled in Fed stress tests. CNBC reports, "The bank sector is now regulated by 'hypotheticals' ... Beware of corporations bearing shareholder gifts ... stock repurchases are a clever accounting trick to inflate the much-publicized earnings per share metric for a stock."
STOCKS: U.S. stocks cheered a weaker dollar and the Fed's green light to big banks to expand stock buybacks. Downbeat economic data was ignored, such as; U.S. import prices climbing last month for the first time in nine months and retail sales slumping in February for the third month in a row, missing forecasts. Falling retail sales indicate that consumers aren't spending the windfall from lower energy prices. Why? Two big reasons; 1) The U.S. middle class is stuck in neutral, due to stagnant wages and 2) Americans have all but lost confidence in government. Gallup reports, "Only 23 percent of Americans have a great deal of confidence in the Supreme Court, 11 percent in the executive branch and 5 percent in Congress."
GREEK CRISIS: "Greece Passes Law To Plunder Pension Funds," reports ZeroHedge."Greek government finally signed the bill today that enables them to plunder the Greek people's pension funds (for their own good). The massive irony of this bill is the bill enables greek deposits to be fully invested in Greek sovereign bonds ... which Tsipras and Varoufakis both admitted today is 'unsustainable' and 'will never be repaid.' Cash reserves of pension funds and other public entities kept in Bank of Greece deposit accounts can be fully invested in Greek sovereign notes, according to amendment to be submitted in parliament, country’s finance ministry."
GOLD: Precious metal prices steadied Thursday on a weaker dollar. March is only half over but demand for American Eagle gold coins from the U.S. Mint has surpassed the previous month's sales. "The U.S. Mint has sold 41,000 ounces of gold American Eagles, up from 37,000 ounces in February." Meanwhile, Reuters reports, "A rare five-dollar gold piece and a prized silver dollar each could fetch $10 million or more in upcoming auctions, making the American rare coin market as attractive as fine art." During times of economic uncertainty both hard money and rare collectibles tend to be viewed at as safe havens. Swiss America believes a balanced portfolio should include physical gold consisting of both bullion and numismatic coins.
3.11.15 - "Zombie Banking System" Dead Ahead!
Gold last traded at $1,150 an ounce. Silver at $15.36 an ounce.
STOCKS: U.S. stocks traded slightly lower following Tuesday's smackdown. Marketwatch reports, "The reality is that the market will never be fully ready for a hike in the interest rate. Investors are used to cheap money, and they are not going to be happy if you pull that plug," said Naeem Aslam, chief market analyst at AvaTrade. Meanwhile, Wall Street profits may be down this year, but bonuses are still up 3%.
DOLLAR: The euro is just 7 cents away from dollar parity for the first time since 2002. Some experts say this time the euro could fall to 85 cents. But "The math doesn't add up" reports CNBC. "The upward run in the U.S. dollar to 12-year highs shows the currency index could be reaching a peak soon, if history is any guide." Could a strong dollar force the Fed to stall interest rate hikes? Stay tuned. "Today, the dollar has reached the last of its cat-like nine lives. It might continue as a ghost or virtual or zombie currency. It's fast-approaching next fall, however, will end its final incarnation as tangible currency," writes Craig Smith on page 69 of DON'T BANK ON IT!
BANKS: Speaking of zombies ... it's a big day for big banks as the Fed rules on stock buybacks and dividends. JPMorgan Chase & Co. and Citigroup Inc., are expected to win Federal Reserve backing today to buy back more shares and increase their dividends in the coming year. But critics of the strategy question its sustainability. The post-crash financial system is more concentrated than before; the biggest banks more, not less, dominant - and subprime lending is back. Bloomberg reports, "Bank buybacks are a symptom of a 'zombie banking system'".
DEBT: "Our country is broke," says Boston University economist Laurence Kotlikoff: "It's not broke in 75 years or 50 years or 25 years or 10 years. It's broke today," he told the Senate Budget Committee. "Indeed, it may well be in worse fiscal shape than any developed country, including Greece." In reality we're facing a fiscal gap of $210 trillion, Kotlikoff proclaimed. That's 16 times larger than official U.S. debt, "which indicates precisely how useless official debt is for understanding our nation’s true fiscal position."
GOLD: Precious metal prices fell to four-month lows on Wednesday as a rally in the U.S. dollar sapped interest from foreign buyers. Yet, according to the latest World Gold Council data, last year the world’s central banks went on a golden shopping binge to take advantage of the gold price dip. Bank net purchases amounted to 477 tons - 17% higher than the previous year. So why are central banks buying when speculators are selling? Simple. They know that gold is the world's ultimate currency and buying opportunities below $1,200 could soon end. Wise long-term gold owners should consider doing the same right now, while the gold price is at $1,150 an ounce.
3.10.15 - Markets Teeter Amid Dollar Fever
Gold last traded at $1,160 an ounce. Silver at $15.63 an ounce.
DOLLAR: With the U.S. dollar touching fresh 12-year highs, you would think the U.S. markets would be doing a tap dance, but in fact just the opposite is occurring. Today the strengthening dollar is creating plenty of losers, including oil and other commodity markets, emerging markets and the U.S. stock market -whose corporate earnings are very vulnerable to a stronger buck.
STOCKS: The DJIA shed over 300 points Tuesday, while stocks worldwide skidded lower as investor perception grows that the Fed will raise U.S. interest rates sooner rather than later. We shall see. Meanwhile, some experts say the euro is headed for parity with the dollar this year as the EU launches its $1 Trillion QE experiment this month and Europe tightens the noose on Greece. John Hussman offers his stock market warning, "Today U.S. stocks are one of the most overvalued, overbought, overbullish syndromes in the historical record, combined with deterioration in market internals suggestive of a shift toward risk-averse preferences among investors. The resulting combination places current conditions among instances that we identify as a 'Who’s Who of Awful times to Invest'."
BANKS: "BofA's chief strategist says it's a 'better' company since the financial crisis," reports Charlotte Observer. Sure, major banks like BofA have grown 30% since 2009, but the bad news is that the U.S. economy, jobs and wages have not. Over the past six years there has been a shift of world global economic policies from production and stable economic indicators, to speculation and derivatives in an attempt to disguise the printing of money and bad fiscal policy. Read more in The Biggest Bank Heist In History!
FED/ZIRP: The Fed's belief that zero interest rate monetary policy (ZIRP) can achieve low inflation together with below-normal unemployment has lead to reckless policies that are doing considerable collateral damage. The U.S. Fed, Japan and now the EU all hope negative real returns will lead savers to save less and to spend more - which is the goal of negative interest rates. "How Far Below Zero Can Interest Rates Go?" asks WSJ. "People seem willing to tolerate credit card and related fees of around 2% ... people would tolerate negative interest rates of 3% before switching to cash. Peter Berezin of BCA Research notes that people have a psychological aversion to loss, and the prospect of losing money on a super-safe deposit or government bond may have a more powerful effect."
GOLD: Precious metal prices eased back on the dollar surge which sent oil prices below $50. Meanwhile the physical gold market may undergo a dramatic change in 10 days when the monopoly of the four London price fixing banks (London Gold Market Fixing Ltd.) will hand over the twice-daily fix to the International Commodity Exchange's (ICE) trading platform. Starting March 20, the London gold price will be no longer set through a private arrangement among the four members; Bank of Nova Scotia-ScotiaMocatta, Barclays Bank, HSBC Bank USA, and Societe Generale SA. Instead, the ICE will consist of 11 members, including several major Chinese banks. "By taking its seat at the gold-pricing table, China inadvertently will act as a proxy for gold coin and bullion owners all over the world," reports GATA.org. This may bring more transparency and stability to the gold market, attracting more value-oriented buyers.
3.9.15 - Banks At Risk From "Cyber 9-11"
Gold last traded at $1,166 an ounce. Silver at $15.77 an ounce.
STOCKS: Monday, absent any fresh economic news, U.S. stocks quietly celebrated the bull market's sixth birthday with the unveiling of Apple iWatch in the center ring. The S&P 500 hit a bottom on March 9, 2009 at 676 - after falling 50% from its peak in October 2007 - but in the six years since that low, it has more than tripled in value. However, over the last decade the S&P Index is up just 60%, or 6% per year. According to iWatch reader feedback at Marketwatch: "What a sad state of affairs we must be in if all we have to talk is about is the Apple watch, like there is nothing else going on in the world. It's a watch, not a life. It's a phone, not a life."
CYBER-THREAT: Cyber-threats have quickly become the number one threat in banking today, rising over 782% in the last six years. "Regulator warns of 'Armageddon' cyber attack on banks," reports USA Today. Financial regulators are considering new rules to protect against "an Armageddon-type" cyber attack that could devastate U.S. financial markets. Ben Lawsky, head of New York's Department of Financial Services (DFS), said he fears a large enough hack on Wall Street firms could "spill over into the broader economy" - not unlike the mortgage meltdown of 2008. He called such an attack a "cyber 9/11." Lawsky's warning of a cyber attack on Wall Street follows a recent report warning of a band of international cyber crooks (Carbanak) who infiltrated banks and stole over $1 billion from customers over a two year period. London's SC Magazine says, "The Carbanak cyber-raid is the largest bank heist ever conducted online by a single cyber-crime group." [Further reading: "The Biggest Bank Heist in History"]
BANKS: "How safe are you and your bank from cyber-attack?" asks The Guardian. What if a cyber-attack succeeds? You could be unable to access your bank account online or at any ATM. Both the HSBC and NatWest sites have been shut down by hackers in the past. The Bank of England’s executive director Andrew Gracie warns, "A successful attack on a bank today could not only result in the corruption or loss of data held in the bank's systems, but also a complete loss of systems, disrupting a firm’s capacity to operate."
DEBT: David Stockman, author of The Great Deformation says corporate America is cannibalizing itself with stock buybacks."The Fed's balance sheet has ballooned by 9 times since 2000, yet real net investment in the business sector has cratered by 33 percent during the same time period. Once upon a time businesses borrowed long-term money - if they borrowed at all - in order to fund plant, equipment and other long-lived productive assets," writes Stockman. Meanwhile, the Telegraph reports, "global indebtedness has reached its highest level in 200 years." The global public debt has grown by $27 trillion since the financial crisis gripped the world eight years ago, according to the McKinsey Global Institute.
GOLD: Precious metal prices steadied Monday amid a weaker U.S. dollar and higher oil prices. Speculators sold the yellow metal for five straight week as markets begin to price in the possibility of a Fed interest rate hike by September. Long-term accumulation of physical gold below $1,200 an ounce is recommended to achieve maximum wealth preservation as the stock, bond and dollar market bubbles continue searching for new pins. Reminder: The April 15th tax deadline is fast approaching. Don't miss out on some key benefits which may not be available to you next year. Call 800-289-2646 to speak with a Swiss America representative about a precious metals IRA today.
3.6.15 - When Good News Becomes Bad News
Gold last traded at $1,164 an ounce. Silver at $15.80 an ounce.
JOBS: U.S. nonfarm payroll jobs for February totaled 295,000 - about 50,000 above economists' consensus - which sent the unemployment rate to 5.5% (down from 5.7%). However, the average hourly wage remained stagnant, rising just 0.1%; much less than expected. Another weak economic point is the U.S. Labor Force Participation which has stubbornly hovered near a 37-year-low for 11 months now. This is not a robust recovery by any measure.
STOCKS: U.S. stock indexes fell over 1% following the upbeat jobs report. With such good jobs news today, why did stocks fall so sharply? What has investors so spooked? According to CNBC's Art Cashin of UBS, the markets are 'terrified' the Fed is boxing itself in. Investors fear the sooner interest rates begin rising, the sooner stock prices could be revalued lower. Meanwhile, Apple stock will finally join the Dow Jones Industrial index, to replace AT&T on March 18. Telegraph reports, "Apple will make up 4.66% of the Dow, but will not impact the value of the DJIA which is up 1.8% this year."
DEBT: The U.S. will hit its debt limit on March 16, according to Treasury Secretary Jack Lew, who is urging lawmakers to begin taking "extraordinary measures" to finance the government on a temporary basis. So we may again face a political battle to kick the debt can further down the road. Keep in mind it took the U.S. over 200 years to increase the federal debt from zero to $9 trillion. But just since 2007, U.S. debt has more than doubled from $9 trillion to over $18 trillion. Wise economists know this rate of debt increase is unsustainable.
FED: After February's surprisingly strong jobs report, the Fed is now more likely to signal an interest rate hike is near, perhaps as soon as June. It is amazing that in just eight short years Fed Chairs Bernanke and Yellen have presided over a debt creation of more than $9 trillion - which previously took the U.S. over 200 years to achieve! As the old saying goes, 'When your outgo exceeds your income, your upkeep becomes your downfall.'
GOLD: Precious metal prices fell over 2% Friday on the jobs news, while the dollar soared to 12-year highs and Treasury yields jumped up. Question: Has anything fundamentally changed in the economy or financial markets? Answer: No, just the public perception. Gold is still the world's most trustworthy asset, whether daily prices rise or fall. According to Matterhorn's Egon von Greyerz, "We are now in Wonderland, where anything is possible. Real money disappeared a long time ago and we have only fiat money that can be created out of nothing. And whatever needs governments have, they can just print more money to achieve it." Owning physical gold is one of the only assets that is not someone elses' liability!
3.5.15 - U.S. Jobs Recovery: Coming Soon?
Gold last traded at $1,196 an ounce. Silver at $16.16 an ounce.
STOCKS: U.S. stocks inched higher Thursday ahead of jobs data on Friday. Meanwhile, the European Central Bank announced they will kick off a trillion-dollar plan to purchase government bonds (Q.E.) next Monday. Richard Russell's Dow Theory Letter is issuing readers a new warning about exiting stocks and Marketwatch reports, "Tech bubble worse now than 15 years ago."
JOBS AND ECONOMY: The recession of 2009 has never ended in the jobs market. Economic uncertainty has stunted U.S. hiring for the last six years. In fact, companies big and small are planning layoffs; but why? Craig Smith explains why here in his latest appearance on Fox Business Network's Cavuto. "The economy has not turned around yet Neil," says Mr. Smith, author and Chairman of Swiss America. "Brick and mortar companies have some lessons to learn from Kmart, JCPenney, Sears and Radio Shack." Smith reminded Neil that major companies, like Target, have spent more than $2 trillion since 2009 on stock buybacks, pushing their stock prices up much faster than is healthy; given we are living in an economy only growing at 2%. Lower gas prices added $100 billion into the economy, yet even that has not boosted the economy much. Consumers are beginning to spend less and save more. Mr. Smith hopes the Obama administration will stay out of the way of a free market which knows how to grow jobs.
Also a factor, "Boomers Won't Budge," reports Marketwatch. Many older workers are holding on to their jobs instead of retiring - and that's causing a logjam in the labor market. Americans have either decided to remain in the workforce due to finances or because they like working, "and that has meant greater competition for jobs," says Mark Hamrick, Washington bureau chief at personal finance site Bankrate.com. Only 26% of Americans have a traditional notion of retirement in which they plan to stop working altogether, according to a new survey of 7,000 households released last week by The Pew Charitable Trusts.
BANKS: "Citigroup, Morgan Stanley, Merrill Lynch Received $6 Trillion Backdoor Bailout from Fed," reports WallStreetOnParade.com. The Senate Banking Committee held the first of its hearings on widespread demands to reform the Federal Reserve to make it more transparent and accountable. Their is a growing public outrage over how the Federal Reserve conducts much of its operations in secret and appears to frequently succumb to the desires of Wall Street to the detriment of the public interest. Nearly all the money went to too-big-to-fail institutions. For example, in one emergency lending program, the Fed put out $9 trillion and over two-thirds of the money went to just three institutions: Citigroup, Morgan Stanley and Merrill Lynch.
GOLD: Precious metal prices steadied near $1,200 (gold) and $16.20 (silver). Such a deal! Despite lower gold prices, Sprott Asset Management’s Rick Rule tells Kitco he isn’t disappointed with the yellow metal. "I've seen a room at Motel 6 where an ounce of gold would by you 6 nights, and now an ounce of gold buys you 16 nights. That's what gold is supposed to do," he says. "For people like me, gold hasn't disappointed at all." Rule adds that he sees gold as a good store of value.
3.4.15 - Markets Adrift Need A Golden Anchor
Gold last traded at $1,200 an ounce. Silver at $16.16 an ounce.
STOCKS: U.S. stock indexes sunk on Wednesday following disappointing ADP jobs data showing just 212,000 private sector jobs added last week. Traders and investors will focus on Friday's U.S. jobs report. Meanwhile, Target announced they will cut 26,000 jobs in Minneapolis and India to trim costs by $2 billion. [NOTE: Swiss America Chairman Craig Smith will be discussing the Target job cuts and the trend of brick and mortar stores toward online sales on Fox News with Neil Cavuto tonight at 8:50pm ET.]
FED: Fed Chair Janet Yellen fretted over the weak recovery starting in 2009, according to WSJ. After six years of experimenting with zero interest rate policy (ZIRP) she is still worried, as we all should be. The Fed knows they have now fostered bubbles in stocks, bonds and the dollar. What they don't know is how to escape without causing a painful market revaluation. Discover the only four choices the Fed has to exit in our new White Paper, The Biggest Bank Heist In History.
BANKS: "Poor Values May Undermine Bank Safety," according to CNBC. Fed Chair Janet Yellen lashed out at the culture in the nation's biggest banks on Tuesday saying, "there may be pervasive shortcomings in the values of large financial firms that might undermine their safety and soundness." Yellen also said that banks' so-called resolution plans still had shortcomings. By "poor values," Yellen is referring to charges of market manipulation of interest rates (libor), sub-prime lending practices and precious metal price suppression - all of which have been practiced by the Fed for many, many years! Talk about the Fed pot calling the bank kettles black!
CYBER-THREATS: Is your Fridge Spying on You? Technology companies have a financial agenda to tie us all to an "Internet of Things" (IoT). Beware of the loss of privacy modern conveniences may include. Meanwhile, The Fiscal Times warns, "Your Next Flight Could Be Hit By a Cyber Attack." "The National Airspace System is vulnerable to cyber attacks," says the GAO, "and the Federal Aviation Administration has not done enough to address the weaknesses." The GAO also faulted the agency for not properly training its cyber security workers to respond in the event of a breach. It said some workers may not recognize and respond appropriately to potential security threats and vulnerabilities.
GOLD: Precious metal prices dipped as the U.S. dollar index posted an 11.5-year high. In today's uncertain economic environment, investing your hard-earned wealth without a proper plan for diversification is like trying to build your dream home without a blueprint. More and more, savvy investors are including hard assets in their retirement plans to provide a balance for their paper investments. It is vital to diversify retirement investments in this way to both safeguard and grow wealth in a variety of financial market conditions. Every portfolio needs a golden anchor to withstand the storms of life. Call (800) 289-2646 to discuss establishing or rolling over an existing retirement plan or IRA into precious metals.
3.3.15 - Statesmen vs. Politicians
Gold last traded at $1,204 an ounce. Silver at $16.29 an ounce.
WASHINGTON D.C.: Today Israeli Prime Minister Benjamin Netanyahu asked the U.S. Congress (minus about 50 Democrats) to block a proposed new Iran nuclear pact. Mr. Netanyahu's speech brought thunderous applause and ten standing ovations, as he boldly declared the principles that bind a free world together, such as "life, liberty and the pursuit of happiness". He contrasted the U.S. founding documents with Iran's, which pledge "death, tyranny, and the pursuit of jihad." He offered hope saying, "the days when Jewish people remain passive in the face of genocidal aggression are over".
In response, President Barack Obama (not in attendance) said Netanyahu didn't offer any "viable alternatives" to the nuclear negotiations with Iran and that Netanyahu's three simple behavioral requirements for Iran; 1.) Stop aggression with Mid-East neighbors, 2) Stop supporting terrorism and 3) Stop threatening to annihilate Israel, would "amount to no deal at all."
"The reason Obama has it out for Netanyahu may be more terrifying than you thought possible," reports Western Journalism. Author Lowell Ponte opines, "Iran’s rulers are building missiles capable of delivering nuclear warheads onto the cities of Israel, Europe, and the United States. The next 9-11-like terrorist attack could vaporize Washington and New York City beneath mushroom-shaped clouds - killing millions, replacing our freedom with garrison states, and crashing our economy."
STOCKS: U.S. stocks pulled back Tuesday, retreating from all-time highs and the psychologically significant 5,000 level for the Nasdaq reached during the previous session. Meanwhile, Bloomberg reports, "Companies in the S&P 500 have spent more than $2 trillion on their own stock since 2009, underpinning an equity rally in which the index has more than tripled."
FED: "Are markets ready for June rate hike?" asks CNBC. BlackRock bond investor Rick Rieder and prominent hedge fund managers Jamie Dinan and Kyle Bass think Yellen's Fed will finally increase the cost of borrowing money in June. "I think when she moves, it's going to cause a problem," Bass said. " I think it's going to be turbulent but it's going to be healthy. In other words, we've got to stop this aggressive monetary stimulus," Dinan said.
GOLD: Gold prices zig-zagged up and down Tuesday on a weaker dollar, holding above the $1,200 an ounce level. Precious metal expert David Morgan sees good times ahead for silver in 2015, telling Kitco, "I think we're going to be able to get to the $26 level by this fall". Morgan is also optimistic about gold prices, expecting $1,550 an ounce gold by October, 25% higher than current levels.
3.2.15 - Wake up and smell the danger!
Gold last traded at $1,208 an ounce. Silver at $16.41 an ounce.
STOCKS: U.S. stocks rallied Monday as the Nasdaq index hit 5,000 for first time in 15 years. But many market analysts believe the U.S. stock market is at its most overvalued level in history. Smarter Analyst reports, "The notion that the stock market is cheap certainly makes no sense. The opposite is actually the case, and the wide dispersion of overvaluation makes the market potentially even more dangerous than it was during previous asset bubbles."
FED: "A Financial System Still Dangerously Vulnerable to a Panic," reports WSJ. The authors argue, "The Federal Reserve’s powers need to strengthened." Like most progressive economic advisors, they envision a Fed unfettered by the Legislative Branch - empowered to help save the economy with more and more money creation. They view the Fed as the 4th Branch of Government. This WSJ article fails to mention the central bankers and the Wilsonian Progressives who created the Fed have slowly but surely shrunken the value of the U.S. dollar (and our labor) by 97% in the last century.
BANKS: "Banker bashing wins votes but real culprits go unpunished," reports Telegraph. As former New York Attorney General Eliot Spitzer once said, "Bankers make the guys on Wall Street look good." Meanwhile, CNBC reports, "Ultra-easy central bank monetary policies are about to come back to bite the global economy," says bond guru Bill Gross. "The financial repression that goes along with easy-money policies is doing harm and the financial system has become increasingly vulnerable only six years after its last collapse in 2009," said Gross. DON'T BANK ON IT! authors Craig Smith and Lowell Ponte have been sounding this message for years. Are you prepared when the Fed policies "bite"?
WASH. DC: Israeli Prime Minister Benjamin Netanyahu is expected tell Congress Tuesday that the agreement taking shape with Iran will leave them with the ability to pursue the development of nuclear weapons. NBC reports, "Prime Minister Benjamin Netanyahu of Israel said Monday that he meant no disrespect to President Barack Obama by accepting an invitation to speak to Congress." Legendary entertainer, and Swiss America spokesperson, Pat Boone will attending Mr. Netanyahu's speech to Congress Tuesday at 11am ET.
GOLD: Precious metal prices dipped Monday amid technical selling and a firmer U.S. dollar. Don't wait another day to buy gold at bargain prices.